Beyond Earnings: Applying the HOLT CFROI and Economic Profit FrameworkBeyond Earnings is targeted at investors, financial professionals, and students who want to improve their ability to analyze financial statements, forecast cash flows, and ultimately value a company. The authors demonstrate that reported earnings are easily gamed by accounting shenanigans and reveal how commonly used profitability measures such as return on equity can be misleading. Because earnings and P/E ratios are too unreliable for valuation, this book takes you beyond earnings and shows you how to apply the HOLT CFROI and Economic Profit framework in a step-by-step manner. A better measure of profitability results in improved capital allocation decisions and fundamental valuations. This ground-breaking book offers the first practical in-depth discussion of how profitability and growth fade, and shows how to put this information to work right away. The authors introduce their trailblazing Fundamental Pricing Model which includes fade as an adjustable value driver and can be used to value the impact of business model disruption. As the authors explain, the key to superior stock picking is understanding the expectations embedded in a stock’s price and having a clear view of whether the company can beat those expectations. The HOLT framework has been rigorously field tested for over 40 years by global investment professionals to help them make better stock picks and by corporate managers to understand the expectations embedded in their stock price. Beyond Earnings is an indispensable guide for investors who want to improve their odds of outperforming the competition. |
From inside the book
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... SUSTAINABILITY OF CAP THOUGHT EXPERIMENT: THE VALUATION OF CORE UNLIMITED THE PROBABILITY OF PERMANENT DISRUPTION THE CHARACTERISTICS OF COMPETITIVE ADVANTAGE FADE IS A VALUE DRIVER THE FUNDAMENTAL PRICING MODEL THE VALUE DRIVER TREE ...
... SUSTAINABILITY OF GROWTH FORECASTING GROWTH CONCLUSIONS NOTES 11 EVALUATING MARKET EXPECTATIONS KEY LEARNING POINTS THE RELATIVE WEALTH CHART ASA DECISION AID FOR EFFICIENTLY ASSESSING STOCK OPPORTUNITIES DISTILLING EXPECTATIONS FROM A ...
... sustainable growth. Investment growth in the terminal period should not exceed the risk‐free rate. As the return on capital fades, the retention ratio will have to increase to fund sustainable steady‐state growth. EXHIBIT 5.14 The HOLT ...
... sustainable growth rate. EXHIBIT 10.8 The calculation of Amazon's normalized growth rate. EXHIBIT 10.9 2015 automobile manufacturer sales as a percentage of total. 2025 assumes 2% annual sales growth versus 50% for Tesla. 2048 shows the ...
... ). Chapter 12 EXHIBIT 12.1 We believe that the purpose of a firm is to build and maintain a sustainable competitive advantage. These are the elements that will help it succeed. “This is a must- read for any serious student of.
Contents
PURSUE | |
WHATS IT WORTH? VALUING THE FIRM | |
A REVIEW OF CONVENTIONAL VALUATION | |
MODEL | |
THE FLYING TRAPEZE OF PERFORMANCE | |
HOLT ECONOMIC PROFIT | |
GEOMETRIC AVERAGE? | |
THE COMPETITIVE LIFECYCLE | |
THE PERSISTENCE OF CORPORATE | |
FORECASTING GROWTH | |
RISK REWARD AND THE HOLT DISCOUNT | |
NOTES | |
CLOSING THOUGHTS | |